Observations on a visit to the Jelai project of P.T. Jelai Cahaya Minerals: a low-sulphidation epithermal Au vein system in East Kalimantan, Indonesia Pollard Geological Services Pty. Ltd. 7 Jillinda Place, The Gap Queensland 4061, Australia peter@peterpollard.com 1 st February 2008
2 Executive Summary The Jelai project in East Kalimantan is a low-sulphidation epithermal precious metal system consisting of at least seven major veins and numerous subsidiary veins with a cumulative strike length of more than five kilometres. Drilling to date has discovered at least five potential ore shoots within the restricted strike length that has been explored. Interpretation of mineral textures in the veins and comparison with models for low-sulphidation epithermal systems suggests that the current level of exposure is near the top of the precious metal zone. Previous drilling on the Mewet shoot indicates that the vein becomes thicker with depth and that the mineralization extends over at least 200 metres vertically. It is recommended that mineral textures are logged in the veins in order to develop a predictive model to assist in exploration. Attention also needs to be given to determining the controls on ore shoot development as a further predictive tool for exploration. It is recommended that the emphasis shift to assessing the size and grade of the known mineralized zones to at least inferred resource status while continuing to systematically drill shallow holes outwards along strike from these zones in an attempt to located further ore shoots.
3 Table of contents Executive Summary...2 Statement of experience...4 Introduction...5 Geological Setting...5 Jelai Vein System...5 Recent drilling...8 Vein textures...10 Grade distribution...12 Conclusions and recommendations...13 References...14
4 Statement of experience Dr Peter Pollard is a consulting economic geologist with more than 20 years experience. He holds a PhD from James Cook University, Australia and is a Member of the Australasian Institute of Mining and Metallurgy and a Fellow of the Society of Economic Geologists. Dr Pollard has wide experience on gold and copper deposits including lowsulphidation and high-sulphidation gold, copper and gold skarn, porphyry coppergold, and iron oxide copper-gold deposits. He has worked on gold deposits and run related in-house training courses in many parts of the world including Australia, Indonesia, Kazakhstan, Papua New Guinea, South Africa and Vietnam. Previous Indonesian gold experience has included work in Halmahera, Kalimantan, Papua, Sulawezi and Sumatera.
5 Introduction At the request of Mr. Rahman Connelly of Kalimantan Gold Corporation Limited a two day visit was made to the Jelai project of P.T. Jelai Cahaya Minerals in East Kalimantan. The author was accompanied on the site visit by Mr. Mansur Geiger and Pak Didik Prasetyo of Kalimantan Gold Corporation and Mr. Brett Gunter of P.T. GMT Indonesia (a consultant to the project). All are thanked for their guidance in the field and discussions concerning the Jelai system. The purpose of the visit was to gain an overall impression of the project, especially with respect to the potential for discovery of further gold mineralization. This was approached by a field visit to parts of the project area to see the veins in outcrop, perusal of diamond drill core at the Jelai camp and examination of previous reports on various aspects of the project. Geological Setting The Jelai project area is located approximately 50km west of Tarakan in northeastern Kalimantan (Fig. 1). Mineralization is hosted within Tertiary andesitic volcanic and volcaniclastic rocks and minor basalt as well as dacite porphyry intrusions. These rocks form part of the Central Kalimantan volcanic arc. Gold mineralization at Jelai is associated with quartz veins (Fig. 2) that show characteristics typical of lowsulphidation epithermal systems including a variety of quartz textures (chalcedonic, crystalline, colloform, crustiform), an association with bladed and massive carbonate, presence of adularia, presence of multiple quartz stages and brecciation of early stages cemented by later stages (see Worsely, 1999). Jelai Vein System Previous exploration in the Jelai area was carried out mainly by BRGM and Indochina Goldfields and led to the discovery of at least seven major veins and numerous subsidiary veins including Mewet, Nyabi-Adau, Obi, Sembawang, Lipan, Tigalima and Taman (Fig. 2). The veins occur in an area of approximately 1.6 by 1.2 km and total some 5km of strike length. Individual veins range up to approximately 8 metres wide and typically occur in zones consisting of several veins separated by bands and slivers of wall-rock which themselves commonly contain cm-scale veins. It is likely that within these broader zones the veins form an anastomosing pattern along strike and down dip where they branch and rejoin in an irregular fashion.
6 Figure 1. Location of the Jelai area in East Kalimantan, Indonesia,
7 Figure 2. Geology of the Jelai area showing the distribution of veins and the holes drilled by Indochina Goldfields (from Worsley, 1999).
8 Recent drilling PT Jelai Cahaya Minerals are currently drilling in the Jelai project area using a scout rig capable of drilling approximately 75m holes. Some 27 holes have been drilled to date (JCM-1 to JCM-27; Fig. 3) and significant assays for holes for which data are available are summarized in Table 1 (see Prasetyo, 2008 for full details). The recent drilling combined with results from the Indochina Goldfields work has proven extremely encouraging and indicates the presence of at least five possible ore shoots, one each in the Mewet, Lipan and Nyabi-Adau veins and two in the Sembawang vein. Hole ID From (m) To (m) Length (m) Au Interception (gpt) JCM-1 21.55 25.70 4.15 4.16 30.70 32.05 1.35 0.19 46.85 49.85 3.00 0.13 JCM-2 75.45 76.00 0.55 0.16 76.70 76.93 0.23 0.48 JCM-3 2.00 3.50 1.50 0.18 JCM-4 21.40 24.10 2.70 1.77 JCM-5 24.50 26.00 1.50 0.25 JCM-9 2.00 5.00 3.00 0.38 37.73 38.30 0.57 1.19 62.80 63.15 0.35 0.31 JCM-11 3.50 5.00 1.50 0.80 JCM-12 31.50 36.32 4.82 1.14 Ag (gpt) JCM-13 19.45 37.75 18.30 1.96 inc 32.00 36.75 4.75 10.50 14.38 - - JCM-14 33.50 37.50 4.00 4.22 inc 35.00 36.50 1.50 10.55 17.4 - - JCM-15 46.75 48.55 1.80 0.15 51.75 53.50 1.75 0.14 JCM-16 16.05 20.20 4.15 0.24 32.20 52.95 20.75 0.69 inc 34.50 38.50 4.00 2.25 JCM-18 1.00 28.90 27.90 0.04 inc 8.95 9.45 0.50 0.12 JCM-19 18.25 21.05 2.80 0.69 As (%) 41.65 44.30 2.65 2.40 54.10 57.60 3.50 0.52-0.10-69.35 69.85 0.50 0.56 30.97 - - Cu (%) 72.65 73.15 0.50 0.32 - - 0.13 JCM-20 42.20 43.93 1.73 0.10 JCM-21 1.00 2.05 1.05 0.21 JCM-22 32.10 33.60 1.50 0.27 Table 1. Summary of recent drilling results (from Prasetyo, 2008).
9 Figure 3. Location of drill holes in the Jelai area (from Prasetyo, 2008).
10 Vein textures Veins within low-sulphidation epithermal systems commonly exhibit a pattern of mineral textures (Fig. 4) that have been interpreted to reflect a combination of structural and fluid conditions during vein formation. Worsely (1999) recognized that veins in the Jelai area contain ore shoots separated by low-grade or barren material and mineral textures typical of low-sulphidation epithermal systems. The mineral textures were interpreted to indicate that the current level of exposure of the Mewet vein is at the upper part of the precious metal interval and the middle-upper part of the colloform-crustiform superzone (Worsley, 1999). This was based partly on the textures exhibited by quartz fragments contained within a later quartz matrix. During the recent field visit, an attempt was made to determine the differences between mineralized and unmineralized vein materials in drill hole JCM-16 from the southern part of the Sembawang vein. The main difference observed was the presence within the mineralized interval (34.50-38.50 averages 2.25 g/t Au) of cm-scale fragments of colloform banded quartz containing dark grey layers. The fragments are contained within a matrix of massive chalcedonic quartz similar to vein material in the unmineralized or weakly mineralized sections of the drill hole. The dark colour of colloform bands is suspected to be due to the presence of very fine-grained sulphides and possibly gold, as is typically the case in other low-sulphidation epithermal systems and as was observed by Worsely (1999) for the Mewet vein. The recently drilled JCM-27 from the central part of the Sembawang vein contains colloform banded veins with dark grey bands (Fig. 5) similar to those observed on JCM-16. In this case the material is in-situ and recently received assays indicate that the interval including this material (16.7-17.35 metres) contains 10.3 g/t Au. The insitu occurrence of the dark grey colloform banded quartz in JCM-27 is similar to the mineralized parts of the Mewet vein and could suggest that the Mewet and southern Sembawang veins are deeper in the idealized system (closer to the precious metal zone and boiling zone) than the Nyabi, Lipan and central Sembawang veins where this material is contained in fragments in massive chalcedonic quartz. However, the magnitude of the possible difference in level is not known as the distance the fragments have been transported is not known. In any case, both styles of mineralization require deeper drilling to determine the vertical extent of the mineralized shoots. Mineralization has been shown to extend over 200m vertically in the Mewet vein (Worsley, 1999).
11 From Worsley (1999) Figure 5. Colloform banded quartz in JCM-27 17.1m showing dark grey bands which may be enriched in sulphides and gold. Recently received assays indicated that the interval 16.7-17.35 metres contains 10.3 g/t Au.
12 Grade distribution The grade distribution in low-sulphidation epithermal systems is highly irregular and commonly reflects the location of ore shoots carrying higher grade separated by barren or low-grade material. Ore shoots can occur in a variety of shapes and sizes, with steeply to shallowly plunging tabular bodies being common. Where present, ore shoots typically occupy only 10-25% of the vein as viewed in long section (e.g. Fig. 6). This means that when employing systematic grid-based drilling of veins containing ore shoots only one in ten to one in four drill holes may intersect mineralization. As an illustration, if it is considered arbitrarily that 1 g/t Au potentially represents an ore shoot then eight of twenty-two holes assayed to date from the current drill campaign have returned significant intercepts. This could be considered as an above average success rate for drilling mineralized veins in these systems, although the drilling to date has not been systematic. Figure 6. Longitudinal section of the Vera-Nancy deposit, Australia (from Worsley, 1999).
13 Conclusions and recommendations Exploration to date in the Jelai region has identified a major low-sulphidation epithermal environment containing several precious metal mineralized veins. At least five gold-bearing shoots appear to have been discovered thus far and there is clearly potential for further discoveries in the several kilometres of untested quartz veins. None of the shoots has yet been drilled out and their size and contained gold are not yet known. Interpretation of mineral textures within the veins suggests that the current surface exposures of the known shoots are probably near the top of the precious metal zone. Earlier work on the Mewet vein shows a vertical extent of at least 200m for the precious metal zone and there thus appears to be major untested potential at depth in the known shoots. The Mewet vein becomes thicker with depth (Worsley, 1999). It is recommended that mineral textures in the quartz veins be logged as a separate exercise to the production logging in order to build up a picture of the distribution of quartz types, bladed carbonate, adularia, brecciation and other vein features. These can then be used together with gold assay data to assist in building a predictive model for the district to guide further exploration. Current drilling using the scout rig is focused on shallow holes to better define the location of veins and to test soil and rock chip gold anomalies. A larger rig is anticipated on-site in the next week or so and this will be employed to explore deeper parts of the system. It is recommended that the emphasis shift to evaluation of the known mineralized zones using the larger rig whilst still gathering systematic data on unexplored parts of the veins using the scout rig. It is recommended that the scout rig be used to systematically drill the veins along their strike lengths working outwards from the current mineralized holes. Naturally the drill program needs to have the flexibility to follow up situations as they evolve, but a systematic evaluation of the veins is recommended. It is recommended that the larger rig be employed to drill the known potential shoots to at least inferred resource status. This will not only give an idea of the size of the shoots and progressively grow the resource, but will also enable a better understanding of the controls on shoots and refinement of the interpretation of mineral textures for the Jelai district veins as a guide to further exploration. Brett Gunter has indicated that the Mewet vein may have sufficient drilling to establish an initial inferred resource. This vein is still open to the north and south as well as at depth (Worsley, 1999). Exploration in low-sulphidation epithermal systems is an exercise in persistence and a series of barren holes should not be taken as an indication of a lack of prospectivity since the success rate can be very low due to the small area of mineralization as viewed in long section that is typical of these systems. The success rate to date is very good and the known mineralized zones now need to be drilled out in order to provide a solid basis for continuing an aggressive exploration drilling program.
14 Worsley (1999) considered that the Jelai vein system has the potential to host a world class deposit. Exploration since that time has met with considerable success and has enhanced the chance of delineating a major gold resource in the Jelai district. References Prasetyo, D., 2008. PT Jelai Cahayan Minerals Mining Authorization (KP): Mewet Project, Kecamatan Sekatak, Kabupaten Bulungan, Kalimantan Timur, Unpublished report to Kalimantan Gold Corporation Limited, 80p. Worsley, M.R., 1999. Mewet lode system Phase II drill proposal, Central Block, Northeast Kalimantan, Indonesia. Technical Record CJM9 P.T. Borneo Exploration & Mining, Indonesia, 9p.